While grocery inflation has slowed, it continues to weigh on shoppers’ purchase decisions

The situation: Even as grocery prices have normalized over the past year—prices were up just 1.1% YoY in October—58% of US households in November were “extremely concerned” about inflation, per 84.51°, a retail data company under The Kroger Co.

• The fact that nearly 3 in 5 US households continue to have inflation on their mind—despite it being at the second-lowest level in the past two years—is a clear sign that high prices continue to weigh on consumers at the grocery store and beyond.
• Consumers’ shopping patterns reflect those concerns. Sixty-nine percent of shoppers in November said that over the past year, they have been looking for sales, deals, and coupons more often (up from 64% in January), 54% are cutting back on nonessentials like snacks (up from 52% in January), and 45% said they were buying fewer items on their grocery trips (up from 39% in January).

Trading down: Nearly half (49%) of consumers are switching to lower-priced brands, including private labels, more often than they were a year ago—an increase from 47% in January.

• That trend hasn’t gone unnoticed as Kroger, Amazon, Target, and Albertsons have expanded their private label offerings to appeal to value-focused shoppers.
• Still, the shift isn’t evenly distributed across categories. While a significant share of consumers are far more willing to trade down in areas such as paper goods (62%) and shelf-stable products (59%), most are reluctant to do so when it comes to beauty (30%), pet food (25%), or baby care (21%).
• Only 30% of consumers are open to buying a cheaper pet food brand, a lower percentage compared with drinks (39%), personal care (40%), and beauty (41%).

Challenges ahead: While progress has been made in curbing grocery inflation, the policies of the incoming Trump administration have raised concern that prices could climb again.

• President-elect Donald Trump plans to impose 25% tariffs on all imports from Mexico and Canada on his first day in office in January. That will send the price of grocery-store staples such as avocados and maple syrup soaring. He has also threatened to levy 100% tariffs on members of BRICS, an informal consortium of countries including Brazil, which could drive up the cost of coffee and other products.
• He vowed in an interview on NBC’s “Meet the Press” to carry out mass deportations of people who are living in the US illegally. Undocumented workers account for at least 16% of the US food supply chain, per the Pew Research Center, which is why a Peterson Institute study estimates that policy could lead food prices to soar 10%.

Our take: The prospect of another wave of rising prices looms large for national brands, which are still recovering from the previous inflation surge.

This article is part of EMARKETER’s client-only subscription Briefings—daily newsletters authored by industry analysts who are experts in marketing, advertising, media, and tech trends. To help you finish 2024 strong, and start 2025 off on the right foot, articles like this one—delivering the latest news and insights—are completely free through January 31, 2025. If you want to learn how to get insights like these delivered to your inbox every day, and get access to our data-driven forecasts, reports, and industry benchmarks, schedule a demo with our sales team.